SAM:Mexican Senate passes junk-food tax

The 8 per cent tax will apply to foods with at least 275 kilocalories per 100 grams, such as snacks, peanut butter, ice cream and chocolate – in the land that gave it its name.
Photo Reuters

Mexico’s Senate has passed a special tax on junk food, a controversial levy opposed by companies which argue that it would do little to alleviate the country’s obesity epidemic.

The measure is part of a vast fiscal reform pushed by President Enrique Pena Nieto to boost the country’s dismal tax revenues.

The Senate on Wednesday voted 72-2 to impose an eight per cent tax on foods with at least 275 kilocalories per 100 grams, such as snacks, flan, peanut butter and ice cream.

The conservative opposition was absent during the voting after walking out over its rejection of another reform measure, a sales tax hike for states bordering the US.

Since the proposed junk-food tax is higher than the five per cent levy that was approved by the chamber of deputies this month, the measure will go back to the lower house for a new vote.

Backers of the bill say it will help combat obesity and diabetes in a country where more than two-thirds of the population is either overweight or obese.

But critics say the underlying goal is to raise revenue for a government with a dismal tax intake amounting to 13.7 per cent of gross domestic product, compared with 18.4 per cent in the rest of Latin America.